Question
On December 31, 2020 Company A purchased a car for 5,000 KWD from Company B on account. Company will pay the full amount of 5,000
On December 31, 2020 Company A purchased a car for 5,000 KWD from Company B on account. Company will pay the full amount of 5,000 KWD in the coming 6 months. In the end of the day accountants prepared the balance sheet and showed the new car in the Inventory account as part of Current Assets, and showed the amount due to Company B in the Accounts Payable as part of the Current Liabilities. Note that Company A's main business is buying and selling cars. Which of the followings is correct?
a. Accountants of Company A should not show the amount due to Company B in Accounts Payable.
b. This transaction increased the Total amounts of the both sides of the Balance Sheet with an equal amount.
c. Accountants of Company A should show the new car in the Vehicles instead of Inventory account.
d. Accountants of Company A should not show the new car as part of the Current Assets.
e. Accountants of Company A should show the amount due to Company B as part of Non-Current Liabilities.
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